April 2026 Market Review: Equities Surge On US-Iran Ceasefire

(MENAFN- DailyFX (IG)) The Global Rally: Equities Surge, Technology Leads

The S&P 500 performed excellently in April, its best month since November 2020, closing above 7,200 for the first time. The Nasdaq led the way, up 15.3%, with technology the standout sector, advancing more than 20% and accounting for nine of the top ten S&P 500 performers for the month. Earnings season added fuel to the rally, Alphabet beat revenue expectations and raised its 2026 capex guidance to $190 billion, while Caterpillar and Eli Lilly also beat forecasts. Not everything rallied; Meta and Microsoft both fell on AI capex concerns, but the broad message was one of renewed confidence in US growth assets.

European indices fared well on the ceasefire news, with Germany's DAX jumping 4.9% on the day of the announcement and France's CAC 40 gaining 3.6%. The FTSE 100 lagged, however, caught in the same structural trap as March but in reverse. Having been supported by high oil prices in early 2026, the index was dragged back in April as BP and Shell sold off sharply when Brent retreated. Airlines, manufacturers, and consumer companies bounced, but the net effect for the UK index was modest relative to its European peers.

Indices chart Source: Bloomberg Fixed Income: Gilt Yields Hit a 17-Year High

While equities celebrated, the fixed income market told a more sobering story. The 10-year gilt yield broke above 5% in April for the first time since 2008, a level that would have been considered extraordinary as recently as eighteen months ago, when the Bank of England was cutting rates toward what many expected to be a 3% floor.

The move reflected a fundamental repricing of the UK rate path. Before the US-Iran conflict erupted, the Bank had projected CPI returning to its 2% target as early as April 2026 and markets had been pricing further rate cuts through the year. Both assumptions are now firmly off the table. UK CPI stood at 3.3% in March, its highest reading in years, and the MPC's own projections now see inflation trending higher.

The MPC voted 8-1 to hold Bank Rate at 3.75%. Governor Andrew Bailey described the outlook as "the most difficult combination" of economic effects, rising prices alongside weakening growth. Markets are now pricing more than a 50% probability of a hike in June, a complete reversal from the rate-cut expectations that prevailed just two months ago.

The Federal Reserve also held at 3.50–3.75% in what was Jerome Powell's final FOMC meeting as Chair, with US inflation at 3.3% and the CME FedWatch tool assigning less than a 5% probability to a cut at the June meeting.

The consequence for gilt investors was continued pain. Higher yields mean lower prices on existing holdings, and with duration risk clearly elevated, government bond allocations delivered negative returns for the second consecutive month. Short-dated bonds continued to outperform longer maturities, as investors seek to limit their exposure to further yield rises while still earning an income that now comfortably exceeds inflation expectations on shorter dated holdings.

10 Years Glit Yield chart Source: Bloomberg The Portfolios

April was a materially better month for the Smart Portfolios, with US equity the dominant driver of returns across all five risk profiles. Higher-risk portfolios captured the most from the equity surge. Fixed income remained a slight headwind with gilt yields continuing to rise. Yet emerging market debt and corporate credit fared well in April.

The Smart Portfolios provide professionally managed, risk-profiled exposure using BlackRock's iShares ETFs across five options from Conservative to Aggressive, matching different time horizons and risk tolerances. Automatic rebalancing maintains target allocations, while costs significantly below traditional active funds compound meaningfully over time. The portfolios are available in ISA and SIPP structures for tax efficiency.

Smart Portfolio Performance chart Source: Bloomberg

Sources: Bloomberg, FTSE Russell, Bank of England, YCharts, Goldman Sachs Asset Management, CNBC, S&P Global Market Intelligence, MSCI, LSEG, ONS (all data as at 30 April 2026)

Past performance is no guarantee of future returns. Tax treatment depends on individual circumstances and may be subject to change in the future. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.

Important to know

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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